Laggard

What it is:

Laggard describes a stock that fails to perform as well as the overall market or a group of peers.

How it works/Example:

In a broad sense, the termlaggard connotes resistance to progress and a persistent pattern of falling behind. In a financial sense, a laggard may be a stock or other market-traded security that has historically underperformed on a consistent basis. For example, if biotechnology stock ABC consistently posts annual returns of only 2% when other stocks in the industry post average returns of 5%, stock ABC would be considered a laggard.

Why it Matters:

If you hold them in your portfolio, laggards are generally the first candidates for selling. In the example above, holding a stock that returns 2% instead of one that returns 5% costs you 3% each year. Unless there is some solid reason to believe that a catalystwill lift shares of a stock that has historically lagged its competition, continuing to hold the laggard costs you money.

Best execution refers to the imperative that a broker, market maker, or other agent acting on behalf of an investor is obligated to execute the investor's order in a way that is most advantageous to the investor rather than the agent.

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